Did greedy bankers cause the housing bubble?
excerpts from John Stossel's special, "Top 10 Politicians' Promises Gone Wrong"
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| John Stossel: | These experts on the housing bubble point out: not only did our [national housing] policy cost taxpayers billions, it also |
| Russell Roberts: | ...killed neighborhoods; it's ruined peoples' lives; it gave people an illusion they could afford something they couldn't afford, rich and poor. |
| John Stossel: | I'm told greedy bankers caused the bubble. |
| Howard Husock: | Government exaggerates, rather than minimizes, the age-old impulse to greed. The government made it harder for bankers to do the right thing |
| John Stossel: | ...because if a banker stayed with safe loans, he missed out on profits he could have made selling lots of high-risk loans to [government-controlled mortgage agencies] Fannie Mae and Freddie Mac. |
| Howard Husock: | If he was making good loans he might only be earning 8% rather than 20%. Maybe he loses his job as CEO. |
| John Stossel: | The most damage was done through the bundling of bad loans and Fannie and Freddie, but some was done by a law that required banks to lend to disadvantaged people. ... Congress told banks: make loans in poor neighborhoods or we may not let you merge with other banks. ... |
Russell Roberts is Professor of Economics at George Mason University and the J. Fish and Lillian F. Smith Distinguished Scholar at the Mercatus Center, and a research fellow at Stanford University's Hoover Institution.
Howard Husock is vice president for policy research at the Manhattan Institute for Policy Research, where he is also director of its Social Entrepreneurship Initiative. He is a City Journal contributing editor.
John Stossel is, well, John Stossel. He's unique. And you already know who he is.
"Scratch the surface of an endemic problem ... and you invariably find a politician at the source." -- Simon Carr, in his review of The Mystery of Capital by Hernando de Soto
Thanks for the ping/post; post; thread. (Hernando de Soto is great.)